Student debt linked to the value of academic labour?

Andrew McGettigan has posted a useful analysis of the government’s ‘plans’ for financing higher education. What struck me was his last remark:

“In immediate policy terms, OBR assumes that tuition fees will rise with inflation from 2016-17, and then in line with earnings from 2019-20. As they have emphasised in previous years, without the link to earnings (which are projected to rise faster than inflation in the long-term), university income would be eroded owing the labour-intensive nature of HE.” (Andrew’s emphasis)

The way I read this is that from 2019, the interests of students and academics will be set against each other in a way they have not been in conflict before: Student debt (tuition fees) will be linked to the rise in the median value of UK labour power, which includes waged academics.

In the UK, the price of labour power (i.e. wage) has historically risen faster than inflation and therefore the cost of running a labour intensive university rises accordingly. Until 2013, the increase in fees payable by students was periodic, rising 200% from £1000 in 1997 to £3000 in 2006, with tuition income supplemented by state grants via general taxation. During that time inflation rose about 26% and earnings rose about 28%. (Had £1000 tuition fees risen with inflation since 1997, they would be about £1600 today).

If the income for a university (largely tuition fees) is set against inflation as it is expected to be for 2016-17, the main type of costs (wages) is expected to rise more than the main source of income (fees) and over time the university would gradually get poorer. It’s unsustainable under our current funding regime. In this sense, the change might protect academic jobs in contrast to the current arrangement that increasingly puts them at risk. Of course, the idea of whether any of the current economic paradigm of growth is sustainable is questionable in itself. See Michael Roberts here and here for a response to that…

On the one hand, individuals who will be or are students from 2019 naturally want any growth in their debt to remain low relative to inflation – it’s not in their interest for the price of their education/degree/experience to be set higher than the rate of inflation (arguably, debt is not in their interest, full stop). On the other hand, workers, such as academics want any growth in their earnings to be high relative to inflation so that real wages are high.

So, it seems to me that if the assumption that fees will be tied to earnings is true, then a conflict of interest between students and academics is introduced that currently doesn’t exist. Although the change will help create a form of equivalence between income and outgoings for the institution, it creates a situation where the academic effectively says to the student: “As my wages go up, so do your fees” (or “as my value goes up, so does your indenture”), instead of “As the cost of living goes up, so do your fees.”

That workers are forced into a position of having competing interests among themselves is fundamental to capitalism, but this latest prediction struck me as reinforcing a dysfunctional relationship between students and academics.

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